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In brief

On 10 December 2020, the European Commission published its proposal for a new Sustainable Batteries Regulation (“Regulation“), as part of its wider strategy for a climate-neutral, resource-efficient EU economy. The draft legislative proposal aims to ensure that all batteries placed on the EU market are sustainable, circular and safe, by introducing specific requirements across different stages of the product life cycle as well as new CE marking requirements for batteries. It represents a sweeping overhaul of the existing regulatory framework for batteries in the EU, with potentially significant implications for manufacturers, producers, importers and distributors of batteries and products containing batteries.


Background

This new regulatory framework is the first proposed initiative under the Commission’s new Circular Economy Action Plan (“Action Plan“), published on 11 March 2020, which is a key part of the European Green Deal and the Commission’s plan to make the EU’s economy sustainable.

The Action Plan promised measures across the entire life cycle of products, from design and manufacturing to consumption, repair, reuse and recycling, to make sustainable products the norm in the EU over the next decade. It identified that a new regulatory framework for batteries was needed in order to enhance the sustainability of the emerging battery value chain for electro-mobility and boost the circular potential of all batteries placed on the market in the EU.

We can expect further legislative proposals under the Action Plan in the coming year, with a view to preventing waste, increasing recycled content, promoting safer and cleaner waste streams, and ensuring high-quality recycling. For an overview of the key themes under the Action Plan, please see our previous client alert here.

Key requirements

The proposal seeks to repeal the Batteries Directive, which has regulated batteries and waste batteries at EU level since 2006. Whereas the Batteries Directive focusses on the end-of-life stage of batteries, with only limited provisions relevant to the production or use phases of batteries, the Regulation aims to establish a comprehensive new framework covering all types of batteries to ensure that they are “sustainable, high-performing and safe…along their entire life cycle” (see Commission press release here).

We have identified the following key requirements for manufacturers, producers, importers and distributors of batteries to be aware of under the Regulation:

1. Sustainability and Safety

  • As of 1 July 2024, rechargeable industrial and electric vehicles batteries with internal storage will require a carbon footprint declaration. From 1 January 2026, those batteries will be subject to classification into carbon footprint performance classes. From 1 July 2027, they will need to comply with maximum life cycle carbon footprint thresholds.
  • From 1 January 2027, industrial, electric-vehicle and automotive batteries with internal storage will have to declare the content of recycled cobalt, lead, lithium and nickel contained therein. From 1 January 2030, these batteries will have to contain minimum levels of recycled content (12% cobalt; 85% lead, 4% lithium and 4% nickel). From 1 January 2035, these levels would be further increased (20% cobalt, 10% lithium and 12% nickel).
  • From 1 January 2027, portable batteries of general use may only be placed on the market if the electrochemical performance and durability parameters are fulfilled. This requirement will apply to batteries with the following common formats: 4,5 Volts (3R12), D, C, AA, AAA, AAAA, A23, 9 Volts (PP3).
  • The current requirement on manufacturers to ensure portable batteries can be readily removed is enhanced and a new requirement is introduced to ensure that the functioning or performance of an appliance is not affected by replacing the battery.
  • Economic operators that place rechargeable industrial batteries and electric-vehicle batteries on the market in the EU will be obliged to establish supply chain due diligence policies. This will include establishing and operating a system of controls and transparency over the supply chain and incorporating supply chain policies into contracts and agreements with suppliers. Note that the Commission is expected to publish legislation in Q2 this year regarding human rights and environmental supply chain due diligence requirements (see our previous client alerts on this topic here and here). Additional sector-specific legislation regarding supply chain due diligence may increase the regulatory burden for businesses operating in the market for batteries in the EU.

2. Labelling and Information

  • From January 2022, all batteries will need to be CE marked to demonstrate their conformity with the requirements of the Regulation and battery manufacturers will be required to draw up an EU declaration of conformity. However, we suspect that many will call for this timeline to be extended (e.g. by 12 months) to allow manufacturers more time to meet the new requirements.
  • Various labelling requirements will apply to different types of batteries including information relating to lifetime, charging capacity, presence of hazardous substances and safety risks. In addition to the CE mark, batteries will need to be labelled with a QR code to access the information relevant to the type of battery in question from 2023.
  • Rechargeable industrial batteries and electric vehicle batteries shall contain a battery management system, which stores information and data needed to determine the state of health and expected lifetime of batteries, to be made available to battery owners and independent operators working on their behalf. This is intended to foster the development of the secondary battery market by facilitating the reuse, repurposing or remanufacturing of the battery.
  • By 1 January 2026, industrial batteries and electric-vehicle batteries shall have an electronic record, unique for each battery, to be identified through a unique identifier. The “battery passport” will register and provide to the public information about every battery model placed on the EU market. This is intended to enable consumers to make informed decisions, manufacturers to develop innovative products and services and provide national authorities and the Commission with a market intelligence tool. Note that this requirement could potentially overlap with the “product passport” contemplated under the Commission’s Action Plan, which suggests solutions such as digital passports, tagging and watermarks to mobilise the potential for digitilisation of product information.

3. End-of-life Management

  • The collection rates to be obtained by Member States of waste portable batteries shall gradually increase so as to ensure that by the end of 2025, 65% of waste portable batteries are collected and by the end of 2030, 70% of such batteries are collected.
  • Existing collection obligations on producers of automotive batteries, industrial batteries and electric vehicle batteries will be reinforced by introducing specific reporting obligations to facilitate enforcement.

The proposals also contain provisions on mandatory green public procurement and on facilitating the enforcement of product rules, namely rules on conformity assessment, notification of conformity assessment bodies, market surveillance and economic instruments.

Industry focus

Under the Regulation, the Commission clearly envisages the introduction of significant new requirements covering manufacturing, design, labelling, collection and recycling throughout the entire life-cycle of batteries, for all battery types. These measures have the potential to have a substantial impact on the market for batteries in the EU, improving sustainability, circularity and transparency across the product value chain. In doing so, they may also place an increased regulatory burden on manufacturers, producers, importers and distributors of batteries, who will need to take necessary steps to ensure compliance.

The draft legislative proposal will need to be adopted by the European Parliament and Council before it enters into force. The current text of the proposal envisages that the Regulation would apply from 1 January 2022 with many of the new requirements being phased in over a number of years. The existing Batteries Directive would be repealed from 1 July 2023. The proposed implementation date of 1 January 2022 may not allow for sufficient time to implement potentially onerous new requirements, so it is important to start thinking about the impact the Regulation could have on your business in the coming months.

Please do not hesitate to contact us if you have any questions or would like to discuss the potential effects of these new requirements on your business.

Author

Graham Stuart is a partner at Baker McKenzie's London office specialising in product regulation and environmental, health and safety law.

Author

Rachel MacLeod is a senior associate in Baker McKenzie's London office.

Author

Adeel Haque is an Associate in Baker McKenzie's London office. He is a member of the International Commercial & Trade and Antitrust & Competition practice groups. Adeel qualified in September 2019 and has spent time working in the Firm's Hong Kong office.